Digital Strength Drives First Growth in Music Sales Since 1999 as File Sharing Declines

AllThingsD points to a report from the International Federation of the Phonographic Industry (IFPI) revealing that 2012 saw the first growth in the music market since 1999, a milestone made possible by the strength of the digital music market.

Quote:

Global recorded music industry revenues rose by an estimated 0.3 per cent to US$16.5 billion in 2012, the first year of industry growth since 1999. Digital revenues saw accelerating growth for the second year running, up 9 per cent, with most major digital revenue streams - downloads, subscription and advertising-supported - on the rise.

The report notes that download sales, a market dominated by Apple's iTunes Store, saw a 12% increase in volume. Downloads still represent 70% of the digital music market even as subscription services continue to make inroads and are expected to cross 10% of the digital market this year.

In particular, the report points to the rapid globalization of digital music access, with the number of countries having access to digital music growing from just 23 in early 2011 to well over 100 today. Apple's iTunes Store is a major part of that expansion, with the most recent move to add 56 new countries last December extending Apple's music reach to a total of 119 countries.

The report from IFPI comes just as research firm NPD notes that music file sharing in the U.S. fell sharply in 2012 as customers continue to embrace alternatives such as free streaming services from the likes of Pandora and Spotify. According to the report, the number of peer-to-peer (P2P) music download users fell by 17% last year to account for 11% of Internet users, down from 20% seven years earlier.

Quote:

The volume of illegally downloaded music files from P2P services also declined 26 percent, compared to the previous year; however P2P wasn't the only sharing activity to shrink. Music files burned and ripped from CDs owned by friends and family fell 44 percent, the number of files swapped from hard drives dropped 25 percent, and the volume of music downloads from digital lockers decreased 28 percent.

NPD's survey indicates that 40% of consumers who had illegally downloaded music in 2011 had either stopped doing so in 2012 or reduced the amount of downloading, with availability of free streaming services being cited as the primary reason for the shift.

Yep, I always downloaded music (which, I must note, is not illegal over here) but ever since services like Spotify have emerged I do no longer see the need to download music.

You can listen to almost any song, anywhere for just $10 a month. It's ideal and it is so cheap that it isn't even worth it to download music for free, and it is not as expensive as buying your songs on - may I dare - "old fashioned digital services" like iTunes.

I truly feel the likes of Spotify and Pandora have caused this shift. If you make most of the music easy to access at a fair price. People will pay for it. And so its starting to happen in the music industry.

I just wish the TV and Movie industry would follow suite. I would gladly pay 20-30 bucks for a TV/Movie service that offered up 90% of the titles out there in a high quality format >2-5 MB a sec, or better yet the possibility to cache blu-ray quality for viewing with full DTS-HD audio. Give the people a high quality service with >90% of the titles, similar to what Spotify is doing. and people will start paying you money again. Its that simple!

I truly feel the likes of Spotify and Pandora have caused this shift. If you make most of the music easy to access at a fair price. People will pay for it. And so its starting to happen in the music industry.

I just wish the TV and Movie industry would follow suite. I would gladly pay 20-30 bucks for a TV/Movie service that offered up 90% of the titles out there in a high quality format >2-5 MB a sec, or better yet the possibility to cache blu-ray quality for viewing with full DTS-HD audio. Give the people a high quality service with >90% of the titles, similar to what Spotify is doing. and people will start paying you money again. Its that simple!

Yep, I totally agree. It now feels like as if CDs are ancient and services like iTunes are at best "out-dated". Spotify - for me - is perfect.

I also feel the same as you about the TV and movie industry. There are just a few video on demand services where I live, and often the most recent movies in the digital library are movies that were available on DVD/Blu-Ray months ago. I'd like to watch an episode of "The Big Bang Theory", "The Following", "Dexter", etc. just an hour after it was first aired wherever in the world. I'd like to watch a movie on the same day it's out on DVD/Blu-Ray.

I would definitely be willing to pay something like $20 a month - maybe even a little bit more - so I can watch any episode and any movie whenever and wherever I want: whether that is a "Star Trek" episode from the 90s, or an episode of "Anger Management" which first aired just an hour ago.

Digital revenues increased by an estimated 9 per cent to US$5.6 billion in 2012, now accounting for around 34 per cent of global industry revenues.

Quote:

Download sales increased in volume by 12 per cent globally in 2012 and represent around 70 per cent of overall digital music revenues

Quote:

although the industry is less reliant on income from physical format sales, with their share declining from 61 per cent in 2011 to an estimated 58 per cent in 2012, physical still accounts for the majority of industry revenue.

Physical sales are still earning double the income of downloads, even though they are slowly on the way down. The CD isn't dead yet.